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Should You Invest in Canadian Real Estate?

By | 2017-08-21T10:33:47+00:00 August 21st, 2017|Categories: Canadian Real Estate, Real Estate Investing|Tags: , , , |Comments Off on Should You Invest in Canadian Real Estate?

They say the best time to invest was 10 years ago, and the second best time is now.

But is now the right time to invest in Canadian Real estate?

Some experts would argue that Canadian real estate is 30-60% overvalued, and in some cases I would agree with them.

But you still should invest now, and here’s why:

No matter where we are at in the cycle, a great asset is a great asset.

Warren Buffet, world’s richest investor makes moves based on if the market were to close for 5 years, would he still be happy with his move?

That’s the question you have to ask yourself when you are considering to invest in Canadian real estate.

When you make a decision, you have to make your decision based on strong fundamentals.

Strong fundamentals in real estate are the following 3 fundamentals:

Industry

What are the major industries that are drawing jobs and money into the area? Are these industries growing or declining? Industry drives all real estate including residential and commercial, If there are no jobs, there is no value to the real estate. So make sure industry is strong

Transportation

How can someone get to this property? Is it easy to transport goods and services to? Or is it in the middle of nowhere? Every time a new airline opens up operations in a city, it’s a sign of the city growing. When a new highway is ready to pass a piece of land, the land goes up in value. Does your deal have strong transportation fundamentals?

Net migration

Are people moving into the area you are investing in or are they moving out of the area? This is a huge factor when determining if you should invest in an area or not. Canada generally has strong immigration which fuels the demand for real estate and the supply of housing is expensive to provide so typically housing is in high demand.

There never is a great time to invest in real estate, just like there never is a great time to get married, start a business or start a family, but if the fundamentals are there, then it could make sense to invest in Canadian real estate.

One final factor to consider before making a decision is the NOI, what is the net operating income of the piece of real estate you are looking to acquire?

If the property has a strong NOI and strong fundamentals it will be able to weather the storm should the economy take a dive.

So should you invest in Canadian real estate?

The answer is always “it depends”.

It depends on the following 4 fundamentals

  1. Industry
  2. Transportation
  3. Net migration
  4. NOI

If you have strong fundamentals then you have a strong deal.

Respect The Grind,
Stefan Aarnio